Customs is an authority or agency in a country responsible for collecting and safeguarding customs duties and for controlling the flow of goods (like animals) and hazardous items in and out of a country.
Functions of Customs
- Prevention of smuggling.
- Collection of revenue (duties).
- Appraisement of cargo.
- Maintenance of statistical data required for construction balance of trade.
- Enforcement of quotas.
- Control of bonded warehouses (where dutiable goods are kept until duty on them is paid).
Types of Duties Levied
- Export duty levied on locally produced goods for export.
- Import duty levied on goods imported.
- Excise duty imposed on locally produced goods for home consumption.
Basis of Calculation of the Duties
- Ad valorem duty: A certain percentage of price is added.
- Specific duty: A fixed sum of dutiable good is taxed.
Free trade zone
- It is an area, normally close to port, where prevailing taxes on international trade are not applicable.
- This zone is used for:
- And for reexporting without payment of duties.